Toulouse are also in the hunt, but it is understood Larkham would prefer to be in the UK, after he already once turned down the French giants in favour of the Scots.
Dragons fans have been uneasy about the lack of a big-name signing, particularly with the club back in the Heineken Cup for the forthcoming season.
Signing Larkham would thus be a terrific move for the region’s administrators as well as the squad.
Larkham’s move to Edinburgh was scrapped after the SRU – Edinburgh’s new owners – decided that his wages were too high to be financially viable.